Steve Joyce Shares Growth Plans

Choice Hotels CEO Steve Joyce is never one to mince words, and he had plenty of news to gush about at the Lodging Conference in Phoenix Sept. 17-20. Choice and O’Reilly Hospitality Management had just broken ground on the Cambria Suites Phoenix-Desert Ridge, which will be home to the brand’s national training kitchen. Award-winning chef Michael DeMaria, who has been charged with developing and managing Cambria’s culinary program, introduced a newly crafted banquet and events menu. Choice also added two boutique hotels to its rapidly growing Ascend Hotel Collection—The Gibson Hotel in Dublin, Ireland, and the Lindenwarrah at Milawa, Australia. This brings the portfolio of upscale independent hotels to 108 properties. Here’s what he had to say about the company’s latest news.

Lodging: Cambria Suites launched a new food and beverage program in 2012 with the help of chef Michael DeMaria. How will the training kitchen build on and strengthen the program?

Steve Joyce: We have a great partnership with Chef Michael DeMaria. He is a culinary expert, but he also is a great cook with a great palette. You know he’s a chef because he always has food on his clothing. He’s taking what we did for the restaurants and filling it into catering in a very similar fashion. It’s savory, comfort food that people know and like delivered in interesting ways with great flavor. And it’s done in a way that allows an owner to execute with the staff that’s available to them and a training program that allows them to account for turnover.

Lodging: How does the F&B program make the restaurants a profit center for Cambria owners?

Joyce: People view food and beverage as an amenity for the customer. It shouldn’t be. The reason it hasn’t been profitable [for the hotel industry] is because we’re trying to do things we shouldn’t try to do, with folks who aren’t ready to do it. We put together a program that is readily executable by the kind of folks that work in our hotels, in a way they feel proud of and our consumers love. It’s about ready availability of food. We finally got to a point where we’re doing simpler foods really well. And people love and want to eat it. And, by the way, they’re going to use it regularly, so it allows us to make some money.

The menu also encourages mainline distribution, which means when you’re utilizing an item it’s going into several things, not just one. It allows you to limit the number of products you keep in storage, allows it to stay fresher, and allows you to deliver a product that is really good to eat, interestingly prepared—something that you want but at the same time at a cost that makes sense for the owner.

Lodging: What does the pipeline look like for Cambria?

Joyce: We’ve got three going up in New York: White Plains will open a little later this year, and the Chelsea and Times Square properties will open some time mid to late next year. In a couple of months we’ll open in Miami. And we broke ground in Plano in probably one of the best sites I’ve seen in a long time, right in the middle of [numerous] demand generators.

We broke ground on the Phoenix-Desert Ridge property, which is right across from the Desert Ridge shopping and entertainment center and has excellent visibility. That will probably be a mid-2014 opening, which is great because the Cambria brand is expanding rapidly. We have a lot of hotels that are going to be opening in that time frame, which will allow us to start training those folks.

By the end of the year, we’ll have 30 hotels either open or under construction, so 12 hotels being built. Within a year, we think we’ll have 30 hotels under construction. So we’ve got 30 deals right now that are real and that we think we’re going to capture a large share of. The pipeline continues to expand rapidly as people are getting more and more interested. We’re getting the right kind of developers doing these projects, and most of them are going to be multiunit. We have our first institutional capital investor, Fillmore Hospitality, and they’re going to do at least five properties with us.

Lodging: Why do you think developers find Cambria so attractive?

Joyce: Choice has close to 500,000 hotel rooms. We are generating enormous demands for urban markets and inside-the-beltway type hotels, and we don’t have hotels there. If you look at every urban major market, there are a million folks who call us and we can’t satisfy them. We’ve got a ready stream of customers to put in those hotels, we think they’re going to ramp up quickly, and we think we’re going to run some pretty spectacular numbers for our owner groups. That will feed on itself and people will want to do more of them. I think we’re redefining full service. We’re offering a value that consumers demand, and we’re offering it in a way that’s accessible and desirable to the current travelers—the Boomers and the Gen X- and Y-ers. We don’t have to reinvent ourselves to attract Millennials. We’ve got a brand they like already and it is an inviting brand, not an exclusive brand.

Lodging: Since making its debut in late 2008, the Ascend Hotel Collection has ramped up pretty quickly. To what do you attribute its success?

Joyce: The Dublin and Australia Ascends bring us close to 110 properties, and we only had 18 properties three years ago. I expected us to do very well domestically, but it’s also really expanding as an option internationally, which is exciting. We have huge demand for urban markets, and we don’t have hotels there. The reality is independent hotel owners need and want to be part of a system, but the reason they got in the business was because they wanted to run their own hotel. What we sell them are customers. They buy that and our distribution system, and they get the benefit of being part of a really big hotel operation so they get better pricing on their OTA contracts. And based on the amount of customers we can put in their hotel, they’re going to use the OTAs less. So they get the benefit of procurement programs, and they get the benefit of us generating distribution opportunities.

What They’re Saying

“Strong fundamentals are pervasive around the country and high occupancy levels in the vast majority of markets support aggressive pricing strategy, which will lead to another year of significant room rate increases for most and continued double-digit profit growth will be realized by the average U.S. hotel.”

-Mark Woodworth, president of hospitality research at PKF Hospitality Research

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